Behind the Curve

CLICK CHART TO ENLARGE

CLICK CHART TO ENLARGE

ZERO DOWN ZERO UP
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In an email exchange earlier this week with a reader, I happened to pull up a chart of the Commodity Index going back to the 1700's. As you can see, we had been in a major inflationary cycle since the early 1970's. I traced out the shape of the curve in red in the top chart. Then in the second chart below I took the same red curve and stretched it over the chart of Vancouver SFD sales post dotcom bust (early 2000's).

Ok it's not a perfect match, but the 2 charts span different time periods.

It does however demonstrate the similar energetic move of the Vancouver housing market to the underlying commodities that go into creating housing. It's also is a reflection of what people (investors) will pursue with great energy until they decide otherwise. In this case commodities topped in 2008 with the $147/bbl crude oil peak and then continued their descent in 2011 working the right side of the Eiffel Tower collapse into our current commodity bear market with enough energy to begin deflating other financial assets.

​The Vancouver housing bulls have yet to capitulate, but developers are trying to get ahead of the curve before they do. "B.C. real estate developer proposes ‘no down payment’ on Port Moody condos". Snippet below from Global News January 12, 2016. ​

Townline Homes Inc. is offering what it calls a “historic” zero per cent down offer on its development in Port Moody. By offering to sell one- and two-bedroom units at The Strand development for at least eight per cent under market value, it says the difference will be considered a down payment by the Canada Mortgage and Housing Corporation (CMHC). The only conditions are the buyers must make under a certain amount and promise to live in the unit for at least two years. Keep Reading

David Stockman: The World Economy Is Heading Into Epochal Deflation

SNIPPET from the above interview with David Stockman in August 2015 during the first major break down in paper assets:

China is falling apart... China is the most lunatic pyramid of credit and speculation in human history... capital is now fleeing the swaying towers of the China ponzi... it's over... the central bank driven credit economy is over...